shaw group 103108_SHAWGROUPINC10K

FORM 10-K
SHAW GROUP INC - SGR
Filed: October 31, 2008 (period: August 31, 2008)
Annual report which provides a comprehensive overview of the company for the past year

Table of Contents
10-K - FORM 10-K

PART I

Business.
Item 1.
Risk Factors
Item 1A.
Unresolved Staff Comments
Item 1B.
Properties
Item 2.
Legal Proceedings
Item 3.
Submission of Matters to Vote of Security Holders
Item 4.

PART II

Market for Registrant s Common Equity, Related Stockholder Matters
Item 5.
and Issuer Purchases of Equity Securities
Selected Financial Data
Item 6.
Management s Discussion and Analysis of Financial Condition and
Item 7.
Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Item 7A.
Financial Statements And Supplementary Data
Item 8.
Changes in and Disagreements With Accountants on Accounting and
Item 9.
Financial Disclosure.
Controls and Procedures
Item 9A.
Other Information.
Item 9B.

PART III

Directors, Executive Officers and Corporate Governance
Item 10.
Executive Compensation
Item 11.
Security Ownership of Certain Beneficial Owners and Management and
Item 12.
Related Stockholder Matters
Certain Relationships and Related Transactions, and Director
Item 13.
Independence
Principal Accounting Fees and Services
Item 14.

PART IV

Exhibits, Financial Statement Schedules
Item 15.
SIGNATURES
EXHIBIT INDEX
EX-21.1 (EX-21.1)

EX-23.1 (EX-23.1)

EX-23.2 (EX-23.2)

EX-23.3 (EX-23.3)

EX-31.1 (EX-31.1)

EX-31.2 (EX-31.2)

EX-32.1 (EX-32.1)

EX-32.2 (EX-32.2)

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K
� ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 2008
or
� TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number: 1-12227

THE SHAW GROUP INC.
(Exact name of registrant as specified in its charter)

LOUISIANA 72-1106167
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4171 Essen Lane
Baton Rouge, Louisiana 70809
(Address of principal executive offices) (Zip Code)

(225) 932-2500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered

Common Stock — no par value New York Stock Exchange
Preferred Stock Purchase Rights
with respect to Common Stock — no par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes � No �
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes � No �
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes � No �
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. �
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or
a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer � Accelerated filer � Non-accelerated filer � Smaller reporting
Company �
(Do not check if a smaller reporting
company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes � No �
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant was
approximately $4.0 billion (computed by reference to the closing sale price of the registrant’s common stock on the New
York Stock Exchange on February 29, 2008, the last business day of the registrant’s most recently completed second fiscal
quarter).
The number of shares of the registrant’s common stock outstanding at October 27, 2008 was 83,524,847.
Source: SHAW GROUP INC, 10-K, October 31, 2008

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement for its 2009 Annual Meeting of Shareholders, which will be filed
with the Securities and Exchange Commission (the SEC) within 120 days of August 31, 2008, are incorporated by
reference into Part III of this Annual Report on Form 10-K for the fiscal year ended August 31, 2008 (this Form 10-K).


TABLE OF CONTENTS

PART I
Cautionary Statement Regarding Forward-Looking Statements 2
Item 1. Business 2
Item 1A. Risk Factors 16
Item 1B. Unresolved Staff Comments 33
Item 2. Properties 34
Item 3. Legal Proceedings 35
Item 4. Submission of Matters to a Vote of Security Holders 35

PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities 35
Item 6. Selected Financial Data 37
Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations 37
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 65
Item 8. Financial Statements and Supplementary Data 67
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure 177
Item 9A. Controls and Procedures 177
Item 9B. Other Information 181

PART III
Item 10. Directors, Executive Officers and Corporate Governance 181
Item 11. Executive Compensation 184
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters 184
Item 13. Certain Relationships and Related Transactions, and Director
Independence 184
Item 14. Principal Accounting Fees and Services 184

PART IV
Item 15. Exhibits, Financial Statement Schedules 185
EX-21.1
EX-23.1
EX-23.2
EX-23.3
EX-31.1
EX-31.2
EX-32.1
EX-32.2

EXPLANATORY NOTE
The financial statements of The Shaw Group Inc. (we, us and our) for the quarters ended February 29,
2008 and May 31, 2008 included in this Form 10-K reflect a restatement to correct accounting errors. As
explained in Note 21 — Quarterly Financial Data (Unaudited) and Current Year Corrections of Errors in our
financial statements contained herein, we identified an error on a major power project in our Fossil & Nuclear
segment as we closed our fiscal year 2008. We corrected the errors resulting therefrom and other accumulated
errors pursuant to Staff Accounting Bulletin (SAB) No. 108 in our quarterly periods ended February 29, 2008
and May 31, 2008. The aggregate impact of the accounting errors on net income for three months ended
February 29, 2008 and May 31, 2008 was a decrease in our previously reported net income of approximately
$4.9 million and $2.0 million, respectively. These restatements are reflected within this Form 10-K.

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PART I
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements and information in this Form 10-K may constitute “forward-looking statements”
within the meaning of the Private Securities Litigation Act of 1995. The words “believe,” “expect,”
“anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could” or other similar expressions are intended
to identify forward-looking statements, which are generally not historical in nature. These forward-looking
statements are based on our current expectations and beliefs concerning future developments and their
potential effect on us. While management believes that these forward-looking statements are reasonable as
and when made, there can be no assurance that future developments affecting us will be those that we
anticipate. All comments concerning our expectations for future revenues and operating results are based on
our forecasts for our existing operations and do not include the potential impact of any future acquisitions.
Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our
control) and assumptions that could cause actual results to differ materially from our historical experience and
our present expectations or projections. Important factors that could cause actual results to differ materially
from those in the forward-looking statements include, but are not limited to, those described in (1) Part I,
Item 1A — Risk Factors and elsewhere in this Form 10-K, (2) our reports and registration statements filed
from time to time with the SEC and (3) other announcements we make from time to time.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of
the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after
the date they are made, whether as a result of new information, future events or otherwise.

Item 1. Business.
We were founded in 1987 by J. M. Bernhard, Jr., our Chairman, President and Chief Executive Officer,
and two colleagues as a fabrication shop in Baton Rouge, Louisiana. We have evolved into a diverse
engineering, technology, construction, fabrication, environmental and industrial services organization. We
provide our services to a diverse customer base that includes multinational oil companies and industrial
corporations, regulated utilities, independent and merchant power producers, government agencies and other
equipment manufacturers. We have approximately 26,000 employees that deliver our services from over 150
locations, including 19 international locations. Our fiscal year 2008 revenues were approximately $7.0 billion.
At August 31, 2008, our backlog of unfilled orders of approximately $15.6 billion was diversified in terms of
customer concentration, end markets served and services provided. Approximately 60% of our backlog was
comprised of “cost-reimbursable” contracts and approximately 40% of “fixed-price” contracts. Most of our
major fixed-price contracts contain some cost risk-sharing mechanisms such as escalation or price
adjustments for items such as labor and commodity prices. For an explanation of these contracts, see Part I,
Item 1 — Business — Types of Contracts, below.
Through organic growth and a series of strategic acquisitions, we have significantly expanded our
expertise and the breadth of our service offerings.
In July 2000, we acquired the assets of Stone & Webster, Inc. (Stone & Webster), a leading global
provider of engineering, procurement and construction (EPC), construction management and consulting
services to the energy, chemical, environmental and infrastructure industries. Combined with our existing
pipe fabrication and construction capabilities, this acquisition transformed us into a vertically integrated
provider of EPC services.
Our May 2002 acquisition of the IT Group, Inc. (IT Group) assets significantly increased our position in
the environmental and infrastructure markets, particularly in the federal services sector. The IT Group
acquisition further diversified our end market, customer and contract mix and provided new opportunities to
cross-sell services, such as environmental remediation services, to our existing EPC customers.
Our October 2006 acquisition of a 20% equity interest in Westinghouse Group (Westinghouse) enhanced
our opportunity to participate in the domestic and international nuclear electric power markets. Westinghouse
provides advanced nuclear plant designs and equipment, fuel and a wide range of other products and services

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to the owners and operators of nuclear power plants. Our investment in Westinghouse provides us with access
to projects utilizing Westinghouse’s advanced passive AP1000 technology used in nuclear power plants. For
an explanation of this investment, see Part I, Item 1 — Business — Investment in Westinghouse Segment,
below.
We have acquired and developed significant intellectual property, including downstream petrochemical
technologies, induction pipe bending technology and environmental decontamination technologies. We
believe we have significant expertise in effectively managing the procurement of materials, subcontractors
and craft labor. Depending on the project, we may function as the primary contractor, as a subcontractor to
another firm or as a construction manager engaged by the customer to oversee another contractor’s
compliance with design specifications and contracting terms. We provide technical and economic analysis
and recommendations to owners, investors, developers, operators and governments primarily in the global
fossil and nuclear power industries and energy and chemicals industries. Our services include competitive
market valuations, asset valuations, assessment of stranded costs, plant technical descriptions and energy
demand modeling. Our proprietary olefin and refinery technologies, coupled with ethyl benzene, styrene,
cumene and Bisphenol A technologies, allow us to offer customers integrated refinery and petrochemicals
solutions. Stone & Webster, in conjunction with key alliance partners, including Badger Licensing LLC,
Total Petrochemicals and Axens, offers leading technology in many sectors of the refining and petrochemical
industries.
Shaw Capital, Inc. (Shaw Capital), a wholly owned subsidiary of ours, leverages our global presence,
technical and operational experience and transactional capabilities to identify and develop targeted project
investment opportunities. Shaw Capital receives management fees from its partners and affiliates and may
also have the opportunity to participate with equity ownership in projects.

Reportable Segments
Currently, we are organized under the following seven reportable segments:
• Fossil & Nuclear,
• Environmental & Infrastructure (E&I),
• Energy & Chemicals (E&C),
• Maintenance,
• Fabrication & Manufacturing (F&M),
• Investment in Westinghouse, and
• Corporate
Segment revenue and profit information, additional financial data and commentary on recent financial
results for operating segments are provided in Part II, Item 7 — Management’s Discussion and Analysis of
Financial Condition and Results of Operations and in Note 14 — Business Segments included in Part II,
Item 8 — Financial Statements and Supplementary Data.

Fossil & Nuclear Segment
Our Fossil & Nuclear segment provides a range of project-related services, including design, engineering,
construction, procurement, technology and consulting services, primarily to the global fossil and nuclear
power generation industries.
Nuclear. We support the United States (U.S.) domestic nuclear industry with engineering, procurement,
maintenance and construction services. We hold a leadership position in the nuclear power industry for
improving the efficiency, output and reliability of existing plants (also known as uprates), having brought in
excess of 2,050 megawatts (MW) of new nuclear generation to the electric power transmission grid in the
U.S. between 1984 and the present. In addition, we are currently serving as architect-engineer for the National
Enrichment Facility and are providing engineering services in support of new nuclear units in South Korea
and the People’s Republic of China. We have also been awarded EPC contracts for two AP1000 units for
Georgia

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Power and two additional units for South Carolina Electric and Gas, and have an interim agreement for two
AP1000 units for Progress Energy. We anticipate growth in the global nuclear power sector, driven in large
part by the U.S., United Kingdom, China and South Africa. Our support of existing U.S. utilities, combined
with our 20% equity investment in Westinghouse, is expected to result in increased levels of activity in this
sector for us. Safe and reliable operation of existing plants, concerns about carbon emissions and climate
change and incentives under the Energy Policy Act of 2005 have prompted significant interest in new nuclear
construction in the U.S. Several domestic utilities are developing plans for new baseload nuclear generation.
According to the Nuclear Energy Institute and the Nuclear Regulatory Commission, in the U.S., there are
plans for at least 30 new units under development as of August 2008, with the Westinghouse AP1000 design
being considered for at least 14 of them. We expect that our existing base of nuclear services work, combined
with our collaboration with Westinghouse and the AP1000 design, should position us to capitalize on the
growth within this industry.
Clean Coal-Fired Generation. The rise in oil prices and wide fluctuations in natural gas prices have
prompted electric power companies in the U.S. to pursue construction of new coal-fired power plants utilizing
advanced combustion and emission control technologies. Coal-fired capacity is typically capital intensive to
build but has relatively lower operating costs. During fiscal year 2008, we executed on the design and
construction of six, highly-efficient coal generation facilities under EPC contracts. These plants will have
combined generation capacity totaling more 4,000 MW. Additionally, we signed an alliance agreement in
fiscal year 2008 with a major United Kingdom utility that may lead to the construction of five 800 MW
coal-fired power plants in the United Kingdom. We continue to observe demand for new opportunities in this
market but recognize that public sentiment and potential future regulations targeting carbon emissions could
negatively impact future development of coal and other fossil fuel-fired power plants. Nevertheless, we
believe we are well-positioned to capture a significant market share of future coal-fired power plants when
they develop.
Air Quality Control (AQC). Our AQC business includes domestic and selected international markets for
flue gas desulfurization (FGD) retrofits, installation of mercury emission controls, projects related to
controlling fine particle pollution, carbon capture and selective catalytic reduction (SCR) processes used at
existing coal-fired power plants.
Environmental regulations and related air quality concerns have increased the need to retrofit existing
coal-fired power plants with modern pollution control equipment. We have been selected to provide EPC
retrofit services on many of the power plants requiring FGD for sulfur dioxide emissions control. According
to the June 2007 Argus Scrubber Report, we believe that over 70,000 to 80,000 MW, or approximately 60%
to 70%, of the domestic coal plants that require FGD retrofit systems are either completed or in engineering,
construction or startup phase. We believe that we are the market leader for these services, having been
awarded approximately 25% to 30% of the estimated domestic market for these services. On July 11, 2008,
however, the D.C. Circuit Court of Appeals vacated the Clean Air Interstate Rule (CAIR) in its entirety in its
decision North Carolina v. EPA (Case No. 05-1244). On September 24, 2008, multiple parties to this
litigation filed petitions for rehearing and petitions for rehearing en banc. As a result, the federal CAIR rules
are still enforceable pending resolution of these petitions or other direct action by the D.C. Circuit Court of
Appeals to implement its mandate. Once the court issues its mandate, and so long as the ruling is not reversed
on appeal, the federal CAIR rules will no longer be effective, in which event the fall back position for
affected states may be to rely on existing federal cap-and-trade programs for nitrogen oxide (NOx) (the “NOx
SIP Call” rule promulgated by the Environmental Protection Agency (EPA) in 1998) and sulfur dioxide
(Title IV of the Clean Air Act) as well as existing state legislation and regulation. The lasting effect of this
decision on the FGD market, including any further changes that may arise as a result of the filing of petitions
for rehearing or any prospective development of a revised rule by the EPA to respond to the court’s decision,
is currently unknown.
There is also a market for installation of mercury emission controls at existing coal-fired power plants.
The Clean Air Mercury Rule (CAMR) adopted by the EPA in May 2005 establishes a cap and trade system to
lower mercury emissions by 21% by 2010 and 70% by 2018. However, many states viewed the CAMR
regulations as inadequate and proceeded to implement more stringent requirements. In February 2008, a
federal court ruling set aside the CAMR in regulating mercury emissions from new power plants, reverting to

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the much more stringent maximum achievable control technology (MACT) requirements, until new
regulations are enacted. We have several EPC mercury control projects under execution. We believe the
domestic market for these services could increase in the future as more states establish new rules or as federal
regulations become more stringent.
AQC EPC opportunities outside the FGD and mercury control markets, such SCR and particulate control,
are expected to be more limited than in prior years. However, we expect to continue pursuing NOx and
particulate control work with regulated utilities.
Gas-Fired Generation. In fiscal year 2008, we observed significant renewed interest in new gas-fired
generation as electric utilities and independent power producers look to diversify their generation options.
Recent initiatives in many states to reduce emissions of carbon dioxide and other “greenhouse gases,” and
utilities desire to fill demand for additional power prior to new nuclear power plants being completed, are also
stimulating renewed demand for gas-fired power plants. Gas-fired plants are less expensive to construct than
coal-fired and nuclear plants, but tend to have comparatively higher and potentially more volatile fuel costs.
We expect that gas-fired power plants will continue to be an important component of future power generation
development in the U.S. and believe our capabilities and expertise will position us as a market leader for these
projects. During the third quarter of fiscal year 2008, we signed an EPC contract for a new 620 MW gas-fired
combined cycle power plant in North Carolina and we were awarded an additional 500 MW gas-fired power
plant in Nevada in October 2008. However, we received notice of a suspension until the beginning of 2010 on
the start date of the engineering and construction portion of our recent award for a 620 Mw gas-fired power
plant in North Carolina. We continue to pursue several additional combined cycle projects that may be
awarded in the near future.

E&I Segment
Our E&I segment provides integrated engineering, construction, financial, regulatory, scientific and
program management services for government and private-sector clients worldwide. Our team of
professionals is strategically located throughout the U.S. and abroad to provide innovative solutions to
complex environmental and infrastructure challenges. As such, we design and execute remediation solutions
involving contaminants in soil, air and water. We also provide project and facilities management and related
logistics support for non-environmental construction, emergency response and watershed restoration.
Infrastructure services include program management, construction management and operations and
maintenance (O&M) solutions to support and enhance domestic and global land, water and air transportation
systems.
Federal Markets. Our core services include environmental restoration, regulatory compliance, facilities
management, emergency response and design and construction services to U.S. government agencies, such as
the Department of Defense (DOD), the Department of Energy (DOE), the EPA and the Federal Emergency
Management Agency (FEMA). Environmental restoration activities are centered on engineering and
construction services to support customer compliance with the requirements of the Comprehensive
Environmental Response, the Compensation and Liability Act (CERCLA or Superfund) and the Resource
Conservation and Recovery Act (RCRA). Additionally, we provide regulatory compliance support for the
requirements of the Clean Water Act, Clean Air Act and Toxic Substances Control Act. For the DOE, we are
currently working on several former nuclear weapons production sites including the mixed oxide project at
Savannah River, South Carolina where we provide engineering, construction and construction management
services. The E&I segment also has contracts with the DOE to develop the Next Generation Nuclear Plant and
the Global Nuclear Energy Program as a conceptual design engineering service provider.
For the DOD, we are involved in projects at several Superfund sites and Formerly Utilized Sites
Remedial Action Program (FUSRAP) sites managed by the U.S. Army Corps of Engineers. We will also
continue with the design-build efforts associated with the Inner Harbor Navigation Canal Hurricane
Protection project in Louisiana. For the U.S. Army, we are working on the Army’s chemical demilitarization
program at several sites.
The federal government is utilizing multiple award contracts more frequently, forcing bids for task orders
under the contractual umbrella. Additionally, there is an increase in using performance-based contracting

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vehicles, including guaranteed fixed-price contracts, wherein we assume responsibility for cleanup and
regulatory closure of contaminated sites for a firm fixed-price. In certain circumstances, we purchase
environmental insurance to provide protection from unanticipated cost growth due to unknown site
conditions, changes in regulatory requirements and other project risks.
Our Mission Support and Facilities Management business provides integrated planning, O&M services to
federal customers. These services traditionally include operating logistics facilities and equipment, providing
public works maintenance services, operating large utilities systems, managing engineering organizations,
supervising construction and maintaining public safety services including police, fire and emergency services.
Our customers include the DOE, the National Aeronautics and Space Administration, the U.S. Army and the
U.S. Navy.
We foresee that a significant portion of future DOD and DOE environmental expenditures will continue
to be directed to cleaning up domestic and international military bases and to restoring former nuclear
weapons facilities. The DOD has determined that there is a need to ensure that the hazardous wastes present
at these sites, often located near population centers, do not pose a threat to the surrounding population. We
believe that we are well-positioned to assist the DOD with decontamination and remediation activities at these
sites. Similarly, the DOE has long recognized the need to stabilize and safely store nuclear weapons materials
and to remediate areas contaminated with hazardous and radioactive waste, and we believe that we are
well-positioned to assist DOE with these efforts.
Commercial, State and Local Markets. Our core services in this segment include environmental
consulting, engineering construction management and O&M services to private-sector and state and local
government customers. Full service environmental capabilities include site selection, permitting,
design-build, operation, decontamination, demolition, remediation and redevelopment. We provide complete
life cycle solid waste management services with capabilities that range from site investigation through landfill
design and construction to post-closure O&M or site redevelopment. We also provide sustainability services
on a national basis. We assist commercial clients in defining what sustainability means to them and in
designing and developing operational concepts to integrate sustainability into their businesses.
Coastal and Natural Resource Restoration. We have performed wetland construction, mitigation,
restoration and related work in the Everglades, the Chesapeake Bay area and other areas throughout the
U.S. New opportunities for these types of projects are present in both the governmental and commercial
markets. The Coastal Wetlands Planning Protection and Restoration Act (CWPPRA) provides federal funds
to conserve, restore and create coastal wetlands and barrier islands, and we believe our E&I segment is
positioned to participate in wetlands and coastal restoration work in Louisiana and other locations throughout
the U.S.
Transportation and General Infrastructure. We believe opportunities for our infrastructure-related
services will continue with our state and local clients, stimulated by the need for restoration of aging
transportation, water, waste water and other infrastructure systems. By leveraging our capabilities across
several business segments, we believe that we can participate in large scale and localized infrastructure
projects by partnering with government agencies and with private entities for design and build services to
meet our clients’ needs arising from aging infrastructure, congestion and expansion requirements.
Ports and Marine Facilities. We continue to pursue opportunities in maritime engineering and design
services, including navigation, sediment management, port and waterway development, coastal engineering,
environmental services, shoreline protection and marine security capabilities. As part of this strategy, in 2006,
we acquired a maritime engineering and design firm to enhance our portfolio of services to government and
commercial port and marine facility clients. We believe this additional capability expands our marine
infrastructure planning services and positions us to provide a full range of design, engineering and project
management services to our domestic and international maritime clients.

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E&C Segment
Our E&C segment provides a range of project related services, including design, engineering,
construction, procurement, technology and consulting services, primarily to the oil and gas, refinery,
petrochemical and chemical industries. We expect that the relatively high crude oil prices will continue to
support capital expenditures by our major oil and petrochemical customers and may provide opportunities for
us to increase our activity levels in these service areas.
Chemicals. Demand in the chemical industry remains strong, fueled by strong growth in the economies
of China and India as well as the rising standard of living in other developing economies. We expect the
number of new petrochemical projects to flatten as additional supply comes on-line. Internationally, we
believe the Middle East and China provide the majority of petrochemical capacity expansion opportunities. In
the Middle East, we expect new petrochemical opportunities due to relatively high crude oil prices, the
availability of lower priced feed stock and natural gas and the proximity of the Middle East to the European
and Asian markets. During fiscal year 2007, we were awarded petrochemical projects in China and Saudi
Arabia for our acrylonitrile-butadiene-styrene (ABS) polymer emulsion technology. ABS is a “bridge”
polymer between commodity plastics and higher performance thermoplastics.
Refining. We believe that refiners are searching for new products that can be produced from petroleum
and are considering integration production of those products into petrochemical facilities. We believe the
demand for our services in the refining industry has been driven by refiners’ needs to process a broader
spectrum of heavier and traditionally less expensive crude oils and to produce a greater number of products.
In general, we expect continued economic growth, fuel subsidies and increased oil-fired power generation to
support higher oil demand globally over the next two decades. Additionally, we believe relatively high crude
oil prices, combined with refinery capacity constraints and the demand stimulated by clean fuels and clean air
legislation, are contributing to increasing opportunities primarily in the U.S. and Europe. We are currently
participating in a major domestic refinery upgrade incorporating capacity and clean fuels capabilities. While
the refining process is largely a commodity activity, refinery configuration depends primarily on the grade of
crude feedstock available, desired mix of end-products and considerations of capital and operating costs.
Fluid Catalytic Cracking (FCC) remains a key refining technology. We were awarded a number of grass
root technology contracts in fiscal years 2007 and 2008, primarily to facilities in Asia (particularly in India).
We have an exclusive agreement with one international customer to license a key FCC-derived technology
called Deep Catalytic Cracking (DCC) that encourages the refiner’s entry into the petrochemical arena. We
believe this technology is emerging because of its ability to produce propylene, a base chemical that is in
short supply and for which demand is growing faster than that of ethylene.
Ethylene. Ethylene is an olefin, which is used as a building block for other petrochemicals and polymers.
It is produced by the steam cracking of hydrocarbon feedstocks. Ethylene is used in the manufacture of
polymers such as polyethylene (PE), polyester, polyvinyl chloride (PVC) and polystyrene (PS). Ethylene
represents one of our core technologies. By the end of 2008, we expect the ethylene industry to begin
experiencing the impact of the new wave of steam cracker start-ups in the Middle East, with a surplus supply
of ethylene expected in 2009. We estimate global demand for ethylene will continue to grow in the near term
but not at the rate of supply. We believe this will lead to an oversupply in the market and expected slowdown
sometime between 2009 and 2011. Despite the anticipated slowing of further investment, we believe
additional projects are being slated in the Middle East and India, as oil and petrochemical prices remain high.
We believe that these projects will provide additional opportunities for us.
We expect that major oil and petrochemical companies will integrate refining and petrochemical facilities
in order to improve profits, providing additional opportunities for us. In petrochemicals, we have extensive
expertise in the construction of ethylene plants, which convert gas and/or liquid hydrocarbon feed stocks into
ethylene, and derivative facilities, which provide the source of many higher value chemical products,
including packaging, pipe, polyester, antifreeze, electronics, tires and tubes. We also perform services related
to gas processing including propane dehydrogenation facilities, gas treatment facilities and liquefied natural
gas plants.

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We believe ethylene production from petroleum derived naphtha is declining due to the availability of
alternative low cost ethane feed stock in the Middle East. This change impacts the economic viability of gas
feed steam crackers in North America where the natural gas prices are more volatile as a result of commodity
market trading conditions. We expect new facilities to favor primarily gas feed crackers based on ethane
extracted from natural gas. In fiscal year 2007, we were awarded the contract for a major expansion of an
ethylene plant in Singapore by a major integrated oil and gas company. We estimate our market share to be
approximately 40% of the market during the last 15 years. We are aware of only four ethylene technology
licensor competitors and are well positioned to compete for new opportunities in this market.
Maintenance Segment
Our Maintenance segment is a market leader, providing a full range of integrated asset life cycle
capabilities that compliment our EPC services. We provide clients with reliability engineering, turnaround
maintenance, outage maintenance, routine maintenance, capital construction, tank design, tank construction
and maintenance, architectural and building services, off-site modularization and specialty services. We
perform services to restore, rebuild, repair, renovate and modify industrial structures, as well as offer
predictive and preventative maintenance. Our comprehensive range of services are offered to clients in
combinations that will increase capacity, reduce expenditures and optimize cost, ensuring the highest return
on critical production assets within their facilities. All of our services are provided at client work sites located
primarily in North America. Much of the outage work performed by this segment is performed during the
autumn and spring power plant outage seasons (our first and third fiscal quarters).
Nuclear Plant Maintenance and Modifications. The U.S. currently has 104 operating nuclear reactors
that require engineering and maintenance services to support operations, plan outages, extend life/license,
upgrade materials, increase capacity uprates and improve performance. We provide system-wide maintenance
and modification services to approximately 41 of these 104 operating domestic nuclear reactors. We
concentrate on more complicated, non-commodity type projects in which our historical expertise and project
management skills add value. We also have a leading position in the decommissioning and decontamination
business for commercial nuclear energy plants.
In addition to supporting operations and improving performance at existing commercial nuclear power
plants, we believe there are opportunities for further expansion in plant restarts, up-rate related modifications
and new plant construction. We also believe there are opportunities to pursue on additional in-plant support
services.
Fossil Plant Maintenance and Modifications. We provide fossil plant maintenance services for power
generation facilities throughout North America. Our expertise, developed in the nuclear industry through our
refueling outages and construction planning/execution, is valuable and recognized in the fossil power sector.
Significant opportunities exist for further expansion into this market as energy demand continues to increase
and customers seek longer run times, higher reliability and better outage performance.
Chemical Plant Maintenance and Capital Construction Services. We have a continuous presence in
approximately 90 U.S. field locations serving petrochemicals, specialty chemicals, oil and gas,
manufacturing, refining and infrastructure markets. Looking forward, we believe that petrochemicals, clean
fuels and refining markets provide the best growth opportunities for us. Expansion of these markets has been
enhanced by governmental regulations supporting cleaner burning fuels and the supply of commodity
chemicals to support the current domestic construction market. Our Maintenance segment also includes a
capital construction component serving existing client sites. Capital construction projects are comprised of an
array of revamp efforts along with grassroots green-field projects. The types of construction projects include
constructability reviews, civil and concrete work, structural steel erection, electrical and instrumentation,
mechanical and piping system erection.
In addition to our varied spectrum of maintenance and construction work, we are building experience in
executing large recovery and rebuild projects. We are able to mobilize resources under demanding client
deadlines to rebuild and restore facilities damaged by natural disasters or catastrophes. Our recent successful
project completions include major petrochemical, natural gas processing and refining facilities in Texas and
Louisiana.

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F&M Segment
Our F&M segment is among the largest worldwide suppliers of fabricated piping systems. Demand for
our F&M segment’s products is typically driven by capital projects in the electric power, chemical and
refinery industries.
Pipe Fabrication. We believe our expertise and proven capabilities to furnish complete piping systems in
a global market have positioned us among the largest suppliers of fabricated piping systems for power
generation facilities in the U.S. We are also a leading supplier worldwide, serving both our other business
segments and third parties. Piping systems are normally a critical path item in heavy industrial plants that
convert raw or feedstock materials to products. Piping system integration accounts for a significant portion of
the total man-hours associated with constructing power generation, chemical and other processing facilities.
We manufacture fully-integrated piping systems for heavy industrial customers around the world.
We provide fabrication of complex piping systems from raw materials, including carbon and stainless
steel, and other alloys, such as nickel, titanium and aluminum. We fabricate pipe by cutting it to specified
lengths, welding fittings on the pipe and bending the pipe to precise customer specifications. We currently
operate pipe fabrication facilities in Louisiana, Arkansas, Oklahoma, South Carolina, Utah, Mexico,
Venezuela and through a joint venture in Bahrain. Our South Carolina facility is authorized to fabricate piping
for nuclear energy plants and maintains a nuclear piping American Society of Mechanical Engineers (ASME)
certification.
We believe our induction pipe bending technology is one of the most advanced, sophisticated and
efficient technologies available. We utilize this technology and related equipment to bend pipe made of
carbon steel and alloy items for industrial, commercial and architectural applications. Pipe bending can
provide significant savings in labor, time and material costs, as well as product strengthening. In addition, we
have commenced a robotics program that we believe may result in increased productivity and quality levels.
By utilizing robotics, as well as new welding processes and production technology, we are able to provide our
customers a complete range of fabrication services.
Structural Steel Fabrication. We produce custom fabricated steel components and structures used in the
architectural and industrial markets. These steel fabrications are used for supporting piping and equipment in
buildings, chemical plants, refineries and power generation facilities. Our fabrication lines utilize standard
mill produced steel shapes that are cut, drilled, punched and then welded into the configurations and to the
exact specifications required by our customers. We have fabrication facilities operating in Louisiana, as well
as our newest location in Mexico, which offers the latest in advanced technology and efficiency for structural
steel fabrication.
Manufacturing and Distribution. We operate manufacturing facilities in Louisiana and New Jersey
where products are ultimately sold to operating plants, engineering and construction firms as well as to our
other business segments. Manufacturing our own pipe fittings and maintaining considerable inventories of
fittings and pipe enables us to realize greater efficiencies in the purchase of raw materials, reduces overall
lead times and lowers total costs. We operate distribution centers in Louisiana, Oklahoma, Texas, Georgia
and New Jersey that distribute our products and products manufactured by third parties.
Module Fabrication Facility. We are in the process of establishing a major fabrication facility in Lake
Charles, Louisiana that is expected to supply major equipment assemblies to be used in the construction of the
AP1000 nuclear power plants.

Investment in Westinghouse Segment
Westinghouse serves the domestic and international nuclear electric power industry by supplying
advanced nuclear plant designs, licensing, engineering services, equipment, fuel and a wide range of other
products and services to the owners and operators of nuclear power plants to help keep nuclear power plants
operating safely and competitively worldwide. We believe that Westinghouse products and services are being
utilized in over 60 of the 104 operating domestic nuclear reactors and approximately 50% of the reactors
operating internationally. We are aware of plans for at least 30 new domestic reactors under development,
with

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the Westinghouse advanced passive AP1000 design being considered for at least 14 of them. Internationally,
Westinghouse technology is currently being used for six reactors being constructed in South Korea and four
reactors in China and is being considered for numerous new reactors in multiple countries.
In addition to our consortium agreements with Westinghouse relating to the engineering, procurement
and construction of AP1000 nuclear power units for China and domestically for Georgia Power and South
Carolina Electric & Gas and an interim agreement for Progress Energy, we signed a letter of intent in the
fourth quarter of fiscal year 2008 to create a joint venture for the modularization of nuclear equipment
currently required in the construction for our domestic customers.
Our Investment in Westinghouse segment includes our 20% equity interest in Westinghouse, which we
acquired on October 16, 2006 (the first quarter of our fiscal year 2007) from British Nuclear Fuels plc.
Westinghouse maintains its accounting records for reporting to its majority owner, Toshiba Corporation,
on a calendar quarter basis with a March 31st fiscal year end. Financial information about Westinghouse’s
operations is available to us for Westinghouse’s calendar quarter periods. As a result, we record our 20%
interest of the equity earnings (loss) and other comprehensive income (loss) reported to us by Westinghouse
based upon Westinghouse’s calendar quarterly reporting periods, or two months in arrears of our current
periods. Under this policy, Westinghouse’s operations for the twelve month period ended June 30, 2008 are
reflected in our results of operations for the twelve months ended August 31, 2008. Prior fiscal year results
include the results of operations from Westinghouse for the nine month period from the acquisition effective
date of October 1, 2006 through June 30, 2007 plus the impacts of other items mentioned below including
interest expense and foreign currency translation gains (losses).

Corporate Segment
We operate in a decentralized structure. Our Corporate segment includes the corporate management and
expenses associated with managing our company as a whole. These expenses include compensation and
benefits of corporate management and staff, legal and professional fees and administrative and general
expenses, which are not allocated to other segments. Our Corporate segment’s assets primarily include cash
and cash equivalents held by the corporate entities, property and equipment related to our corporate facility
and certain information technology costs.

Comments Regarding Future Operations
Historically, we have used acquisitions to pursue market opportunities and to augment or increase
existing capabilities, and we may continue to do so. However, all comments concerning our expectations for
future revenue and operating results are based on our forecasts for existing operations and do not include the
impact of future acquisitions. In addition, the financial crisis that adversely impacted U.S. equity markets
throughout 2008, weighed heavily on the share prices of many engineering and construction companies,
including ours. At the time of this filing, it is uncertain what impact the financial/credit crisis may have on our
business. Nevertheless, we remain optimistic about our future growth opportunities as we are focused on
expanding our position in the growing power markets where investments by regulated electric utilities tend to
be based on electricity demand forecasts covering decades into the future.

Customers, Marketing and Seasonality
Our customers are principally multinational oil companies and industrial corporations, regulated utilities,
independent and merchant power producers, governmental agencies and equipment manufacturers. See
Note 14 — Business Segments included in Part II, Item 8 — Financial Statements and Supplementary Data
for information regarding our customer concentrations. Additionally, see in Part II, Item 7 — Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Backlog for information
regarding our backlog concentrations as of August 31, 2008.
We conduct our marketing efforts principally with an in-house sales force. In addition, we engage
independent contractors to market to certain customers and territories. We pay our sales force a base salary

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plus, when applicable, an annual bonus. We pay our independent contractors on a commission basis that may
also include a monthly retainer.
A portion of our business, primarily our nuclear and fossil power plant maintenance business, is seasonal,
resulting in fluctuations in revenues and gross profit in our Maintenance segment during our fiscal year.
Generally, the spring and autumn are the peak periods for our Maintenance segment.

Employees
We employ approximately 26,000 people, including approximately 12,000 permanent employees in our
administrative and engineering offices and fabrication facilities, and approximately 10,000 employees at
projects for which the headcount varies seasonally. Approximately 4,000 employees were represented by
labor unions pursuant to collective bargaining agreements. We often employ union workers on a
project-specific basis. We believe that current relationships with our employees (including those represented
by unions) are satisfactory. We are not aware of any circumstances that are likely to result in a work stoppage
at any of our facilities.
See Part I, Item 1A — Risk Factors for a discussion of the risks related to work stoppages and other labor
issues.

Raw Materials and Suppliers
For our EPC services, we often rely on third party equipment and raw materials manufacturers and
subcontractors to complete our projects. We are not substantially dependent on any individual third party to
support these operations; however, we are subject to possible cost escalations based on inflation, currency and
other market price fluctuations resulting from supply and demand imbalances. In the future, our mix of third
party suppliers will increase as our construction phase progresses on our major nuclear AP1000 EPC
contracts. The current activity levels in many markets we serve are generating higher demand for labor,
materials and equipment that we rely on to execute our contracts. We expect the current market for these
inputs to continue to remain competitive throughout our fiscal year 2009.
Our principal raw materials for our pipe fabrication operations are carbon steel, stainless and other alloy
piping, which we obtain from a number of domestic and foreign primary steel producers. The market for most
raw materials is extremely competitive, and certain types of raw materials are available from only one or a
few specialized suppliers.
In addition to manufacturing our own pipe fittings, we purchase some of our pipe fittings from other
manufacturers. These arrangements generally lower our pipe fabrication costs because we are often able to
negotiate advantageous purchase prices as a result of our purchase volumes. If a manufacturer is unable to
deliver the materials according to the negotiated terms, we may be required to purchase the materials from
another source (or manufacture on our own the pipe fittings) at a higher price. We keep items in stock at each
of our facilities and transport items between our facilities as required. We obtain more specialized materials
from suppliers when required for a project.
In addition, see Part I, Item 1A — Risk Factors for a discussion of our dependence on joint venture or
consortium partners, subcontractors and equipment manufacturers.

Industry Certifications
In order to perform nuclear construction, fabrication and installation activities of ASME III Code items
such as vessels, piping systems, supports and spent fuel canister/storage containments at nuclear plant sites,
our domestic subsidiary engineering and construction operations maintain the required ASME certifications
(N, N3, NPT and NA stamps) (NS Cert). These ASME certifications also authorize us to serve as a material
organization for the supply of ferrous and nonferrous material. We also maintain the National Board nuclear
repair certification (NR stamp) and National Board registration certification (NB stamp) for N and N3
stamped nuclear components.

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In order to perform fabrication and repairs of coded piping systems, our domestic construction operations
and fabrication facilities, as well as our subsidiaries in Derby, U.K. and Maracaibo, Venezuela, maintain the
ASME certification (U & PP stamps). The majority of our fabrication facilities, as well as our subsidiaries in
Derby, U.K. and Maracaibo, Venezuela have also obtained the required ASME certification (S stamp) and the
National Board certification (R stamp).
Our domestic subsidiary engineering and construction operations also maintain the required ASME
certification (S stamp) and the National Board repair certification (R stamp), in addition to the ASME
certifications (A, PP & U stamps) and the National Board registration certification (NB stamp) for S, A, PP
and U stamped items.
Our Laurens, South Carolina, facility also maintains a nuclear piping ASME certification (NPT stamp)
and is authorized to fabricate piping for nuclear power plants and to serve as a material organization to
manufacture and supply ferrous and nonferrous material. This facility is also registered by the International
Organization of Standards (ISO 9002). Substantially all of our North American engineering operations, as
well as our U.K. operations, are also registered by the International Organization of Standards (ISO 9001).
This registration provides assurance to our customers that we have procedures to control quality in our
fabrication processes.

Patents, Tradenames and Licenses and Other Intellectual Property
We consider our computerized project control system, SHAW-MAN TM , and our web-based earned value
application, SHAWTRAC TM , to be proprietary assets. We believe that our E&C segment has a leading
position in technology associated with the design and construction of plants that produce ethylene, which we
protect and develop with license restrictions and a research and development program.
Through Badger Licensing, LLC, we expanded our proprietary technology licensing business through the
acquisition of the Shell Heritage Bisphenol A (BPA) technology from Resolution Performance Products.
Badger Licensing LLC, our joint venture with ExxonMobil Chemical, is in a leading position to supply
proprietary ethyl benzene, styrene monomer, cumene and BPA technologies to the petrochemical industry. In
other Stone & Webster technology partnerships, we are the exclusive provider of front-end basic engineering
for Sasol’s Fischer-Tropsch technology in the areas of both gas-to-liquids and coal-to-liquids.
Through our acquisition of the IT Group assets in 2002, we have acquired certain patents that are useful
in environmental remediation and related technologies. The technologies include the Biofast® in-situ
remediation method, a vacuum extraction method for treating contaminated formations and a method for soil
treatment, which uses ozone. The IT Group acquisition also included the acquisition of proprietary software
programs that are used in the management and control of hazardous wastes and the management and
oversight of remediation projects.
In addition, see Part I, Item 1A — Risk Factors for the impact of changes in technology or new
technology developments by our competitors could have on us.

Competition
The markets served by our Fossil & Nuclear, E&C, Maintenance and E&I segments are highly
competitive and for the most part require substantial resources and highly-skilled and experienced technical
personnel. A large number of regional, national and international companies are competing in the markets we
serve, and certain of these competitors have greater financial and other resources and more experience,
market knowledge and customer relationships. Neither we nor any one of our competitors maintain a
dominant market share position in the markets served by each of these four segments.
In pursuing piping, engineering and fabrication projects, our F&M segment experiences significant
competition in both international and domestic markets. In the U.S., our primary competitors consist of a
number of smaller pipe fabricators; while internationally, our principal competitors are divisions of large
industrial firms. Some of our competitors, primarily in the international sector, have greater financial and
other resources than we have.

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Companies that we compete with in our Fossil & Nuclear segment include Bechtel, Fluor Corporation,
URS Corporation, Black & Veatch and Zachary. Companies that we compete with in our E&C segment
include Chicago Bridge & Iron Company, KBR, Inc., Jacobs Engineering Group, Inc., TECHNIP and JGC
Corporation. Companies that we compete with in our E&I segment include CH2M Hill, URS Corporation,
TetraTech and KBR, Inc. Companies that we compete with in our Maintenance segment include Fluor
Corporation, Day & Zimmerman/The Atlantic Group, Turner Industries, KBR, Inc. and Jacobs Engineering
Group, Inc. Companies that compete with our Investment in Westinghouse segment include Areva, General
Electric (GE), Mitsubishi, Hitachi and Atomstroyexport.
In addition, see Part I, Item 1A — Risk Factors for a discussion of the risks related to competition we
face in each of our business segments.

Financial Information about Segments and Geographic Areas
For detailed financial information regarding each business segment and export sales information, see
Note 14 — Business Segments included in Part II, Item 8 — Financial Statements and Supplementary Data.
In addition, see Item 1A — Risk Factors for a discussion of the risks related to our foreign operations.

Backlog of Unfilled Orders
Our backlog represents management’s estimate of the amount of awards that we expect to result in future
revenues. Awards in backlog are based on legally binding agreements for projects that management believes
are probable to proceed. Awards are evaluated by management on a project-by-project basis and are reported
for each period shown based upon the binding nature of the underlying contract, commitment or letter of
intent, and other factors, including the economic, financial and regulatory viability of the project and the
likelihood of the contract proceeding. Projects in backlog may be altered (increased or decreased) for scope
changes and/or may be suspended or cancelled at any time by our clients.
See Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of
Operations for additional information about our backlog as of August 31, 2008 and 2007. In addition, see
Part I, Item 1A — Risk Factors for a discussion of risks related to our backlog.

Types of Contracts
Our work is performed under two general types of contracts: cost-reimbursable contracts and fixed-price
contracts, both of which may be modified by cost escalation provisions or other risk sharing mechanisms and
incentive and penalty provisions. Each of our contracts may contain components of more than one of the
contract types discussed below. For example, some of our contracts have elements of target price, firm price
subject to certain adjustments, fixed price and cost-reimbursable provisions encompassed within one contract.
During the term of a project, the contract or components of the contract may be renegotiated to include
characteristics of a different contract type. We attempt to focus our EPC activities on a cost-reimbursable plus
a fee or mark-up and negotiated fixed-price work. We believe these types of contracts may help reduce our
exposure to unanticipated and unrecoverable cost overruns. When we negotiate any type of contract, we
frequently are required to accomplish the scope of work and meet certain performance criteria within a
specified timeframe; otherwise, we could be assessed damages, which in some cases are agreed-upon
liquidated damages. All contract types are subject to amendment based on changes agreed with clients.
At August 31, 2008, approximately 60% of our backlog was comprised of cost-reimbursable contracts
and 40% was comprised of fixed-price contracts. See Note 1 — Description of Business and Summary of
Significant Accounting Policies included in Part II, Item 8 — Financial Statements and Supplementary Data
for a discussion of the nature of our operations and types of contracts.
U.S. government contracts are typically awarded through competitive bidding or negotiations pursuant to
federal acquisition regulations and may involve several bidders or offerors. Government contracts also
typically have annual funding limitations and are limited by public sector budgetary constraints. Government
contracts may be terminated at the discretion of the government agency with payment of compensation only
for work performed and commitments made at the time of termination. In the event of termination, we
generally receive

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some allowance for profit on the work performed. Many of these contracts are multi-year indefinite duration,
indefinite quantity (IDIQ) agreements. These programs provide estimates of a maximum amount the agency
expects to spend. Our program management and technical staffs work closely with the government agency to
define the scope and amount of work required. Although these contracts do not initially provide us with any
specific amount of work, as projects are defined, the work may be awarded to us without further competitive
bidding. We generally include in our backlog an estimate of the work we expect to receive under these
specific agreements.
Although we generally serve as the prime contractor on our federal government contracts, or as part of a
joint venture that is the prime contractor, we may also serve as a subcontractor to other prime contractors.
With respect to bidding on large, complex environmental contracts, we have entered into, and expect to
continue to enter into, joint venture or teaming arrangements with competitors.
U.S. government contracts generally are subject to oversight audits by government representatives, profit
and cost controls and limitations and provisions permitting modification or termination, in whole or in part,
without prior notice, at the government’s discretion. Government contracts are subject to specific
procurement regulations and a variety of socio-economic and other requirements. Failure to comply with such
regulations and requirements could lead to suspension or debarment, for cause, from future government
contracting or subcontracting for a period of time. Among the causes for debarment are violations of various
statutes, including those related to employment practices, the protection of the environment, the accuracy of
records and the recording of costs.
Our continuing service agreements with customers expedite individual project contract negotiations
through means other than the formal bidding process. These agreements typically contain a standardized set
of purchasing terms and pre-negotiated pricing provisions and often provide for periodic price adjustments.
Service agreements allow our customers to achieve greater cost efficiencies and reduced cycle times in the
design and fabrication of complex piping systems for power generation, chemical and refinery projects. In
addition, while these agreements do not typically contain committed volumes, we believe that these
agreements provide us with a steady source of new projects and help minimize the impact of short-term
pricing volatility and reduce our sales pursuit costs.
See Part I, Item 1A — Risk Factors for additional discussion of the risks related to contractual
arrangements, including our contracts with the U.S. government.

Environmental Matters
Our operations in the U.S. are subject to numerous laws and regulations at the Federal, state and local
level relating to the protection of the environment and the safety and health of personnel and the public. These
laws and regulations relate to a broad range of our activities, including those concerning emissions into the
air, discharges into waterways and generation, storage, handling, treatment and disposal of hazardous
materials and wastes. Environmental protection laws and regulations generally require us to obtain and
comply with a wide variety of environmental registrations, licenses, permits and other approvals. Failure to
comply with these laws and regulations may result in the assessment of administrative, civil and/or criminal
penalties, the imposition of remedial requirements and the issuance of orders limiting or enjoining some or all
of our future operations.
Under CERCLA and comparable state laws applicable to our domestic operations, we may be required to
investigate and remediate hazardous substances and other regulated materials that have been released into the
environment. CERCLA and comparable state laws impose strict, and under certain circumstances, joint and
several liability for costs required to clean up and restore sites where hazardous substances have been
disposed or otherwise released without regard to whether a company knew of or caused the release of the
substances. We could also incur environmental liability at sites where we have been contractually hired by
potentially responsible parties (PRPs) to remediate contamination of the site. Some PRPs have from time to
time sought to expand the reach of CERCLA, RCRA and similar state statutes to make the remediation
contractor responsible for site cleanup costs in certain circumstances. These PRPs have asserted that
environmental contractors are owners or operators of hazardous waste facilities or that the contractors
arranged for treatment,

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transportation or disposal of hazardous substances. If we are held responsible under CERCLA or RCRA for
damages caused while performing services or otherwise, we may be forced to incur cleanup costs directly,
notwithstanding the potential availability of contribution or indemnification from other parties. Over the past
several years, the EPA and other federal agencies have significantly constricted the circumstances under
which they will indemnify their contractors against liabilities incurred in connection with the investigation
and remediation of contaminated properties.
In response to recent scientific studies suggesting that emissions of carbon dioxide and other “greenhouse
gases” may be contributing to global warming, the U.S. Congress is actively considering, and several states
have already adopted, legislation to reduce emissions of greenhouse gases. In addition, the EPA is considering
adopting regulations to control emissions of carbon dioxide in response to the U.S. Supreme Court’s April
2007 decision in Massachusetts, et al. v. EPA. Any legislation or regulation restricting emissions of
greenhouse gases could have a significant impact on our business. One potential negative impact is a
reduction in demand for construction of new coal-fired power plants, but this impact could be offset by an
increase in demand for construction of new nuclear power plants. It is not possible to predict at this time
whether any such legislation or regulation would have an overall negative or positive impact on our business.
Our operations outside of the U.S. are potentially subject to similar foreign governmental controls and
restrictions pertaining to protection of the environment and the safety and health of personnel and the public.
For example, with respect to climate change, many foreign nations (but not the U.S.) have agreed to limit
emissions for greenhouse gases pursuant to the United Nations Framework Convention on Climate Change,
also known as the “Kyoto Protocol.” Failure to comply with foreign requirements including the Kyoto
Protocol in areas outside of the U.S. where we conduct operations may lead to governmental sanctions
resulting in penalties, remedial obligations and injunctive relief against future activities.
The environmental, health and safety laws and regulations to which we are subject are constantly
changing, and it is impossible to predict the effect of such laws and regulations on us in the future. We believe
we are in substantial compliance with all applicable environmental, health and safety laws and regulations. To
date, our costs with respect to environmental compliance have not been material, and we have not incurred
any material environmental liability. However, we can provide no assurance that we will not incur material
environmental costs or liabilities in the future. For additional information on how environmental matters may
impact our business, see Part I, Item 1A — Risk Factors.

Available Information
We are a Louisiana corporation. Our executive offices are located at 4171 Essen Lane, Baton Rouge,
Louisiana 70809. Our telephone number is 1-225-932-2500. All of our periodic report filings with the SEC
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), are
made available, free of charge, through our website located at http://www.shawgrp.com, including our Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments
to these reports. These reports are available through our website as soon as reasonably practicable after we
electronically file with or furnish the reports to the SEC. In addition, the public may read and copy any
materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C.
20549, or on the SEC’s Internet website located at http://www.sec.gov. The public may obtain information on
the operation of the Public Reference Room and the SEC’s Internet website by calling the SEC at
1-800-SEC-0330.

Certifications
We will timely provide the annual certification of our Chief Executive Officer to the New York Stock
Exchange (NYSE). We filed last year’s certification on December 16, 2007. In addition, our Chief Executive
Officer and Chief Financial Officer each have signed and filed the certifications under Section 302 of the
Sarbanes-Oxley Act of 2002 with this Form 10-K.

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Item 1A. Risk Factors
The risks described below could materially and adversely affect our business, financial condition and
results of operations and the actual outcome of matters as to which forward-looking statements are made in
this Form 10-K. The risk factors described below are not the only ones we face. Our business, financial
condition and results of operations may also be affected by additional factors that are not currently known to
us or that we currently consider immaterial or that are not specific to us, such as general economic
conditions.
The categorization of risks set forth below is meant to help you better understand the risks facing our
business and is not intended to limit consideration of the possible effects of these risks to the listed categories.
Any adverse effects related to the risks discussed below may, and likely will, adversely affect many aspects of
our business.
You should refer to the explanation of the qualifications and imitations on forward-looking statements
under “Cautionary Statement Regarding Forward-Looking Statements.” All forward-looking statements
made by us are qualified by the risk factors described below.

Risks Related to Our Operations
The dollar amount of our backlog of unfilled orders, as stated at any given time, is subject to unexpected
adjustments and cancellations and is, therefore, not necessarily indicative of our future revenues or
earnings.
As of August 31, 2008, our backlog was approximately $15.6 billion. There can be no assurance that the
revenues projected in our backlog will be realized or, if realized, will result in profits. Further, project
terminations, suspensions or adjustments against the original scope of our estimates may occur with respect to
contracts reflected in our backlog as discussed in more detail in the following paragraphs. Our backlog of
$15.6 billion as of August 31, 2008 is higher than our backlog of $14.3 billion as of August 31, 2007. It is
unclear what impact the current market conditions, including limited access to debt and equity financing,
might have on our backlog. These conditions may result in a diminished ability to replace backlog once
projects are completed and/or may result in the delay or cancellation or modification of projects currently in
our backlog. Such developments could have a material adverse affect on our business as discussed below.
Our backlog consists of projects for which we have signed contracts or commitments from customers,
including those based on legally binding agreements without the scope being defined. Commitments may be
in the form of written contracts for specific projects, purchase orders or indications of the amounts of time
and materials we need to make available for customers’ anticipated projects. Our backlog includes expected
revenue based on engineering and design specifications that may not be final and could be revised over time.
Our backlog also includes expected revenues for government and maintenance contracts that may not specify
actual dollar amounts of work to be performed. For these contracts, our backlog is based on an estimate of
work to be performed, which is based on our knowledge of customers’ stated intentions or our historic
experience. Further, our backlog includes many project for which financing has not been secured, and, given
current market conditions, may or may not ultimately become available.
Because of changes in project scope and schedule, we cannot predict with certainty when or if our
backlog will be performed. In addition, even where a project proceeds as scheduled, it is possible that the
customer may default and fail to pay amounts owed to us. Material delays, cancellations or payment defaults
could materially affect our financial condition, results of operation and cash flow and may reduce the value of
our stock.
Reductions in our backlog due to cancellation by a customer or for other reasons adversely affect,
potentially to a material extent, the revenues and earnings we actually receive from contracts included in our
backlog. Many of the contracts in our backlog provide for cancellation fees in the event customers cancel
projects. These cancellation fees usually provide for reimbursement of our out-of-pocket costs, revenues for
work performed prior to cancellation and a varying percentage of the profits we would have realized had the
contract been completed. However, we typically have no contractual right upon cancellation to the total

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revenues reflected in our backlog. Projects may remain in our backlog for extended periods of time. If we
experience significant project terminations, suspensions or scope adjustments to contracts reflected in our
backlog due to inability to obtain project financing or otherwise, our financial condition, results of operation,
and cash flow may be adversely impacted, and the value of our stock may be reduced.

Demand for our products and services is cyclical and vulnerable to sudden economic downturns and
reductions in private industry and government spending. If general economic conditions continue to
weaken and current constraints on the availability of capital continue, then our revenues, profits and our
financial condition may rapidly deteriorate.
The industries we serve historically have been, and will likely continue to be, cyclical in nature and
vulnerable to general downturns in the domestic and international economies. Consequently, our results of
operations have fluctuated, and may continue to fluctuate depending on the demand for products and services
from these industries.
Due to the current economic downturn caused by the decline in the credit markets, many of our
customers may face considerable budget shortfalls or may delay capital spending that may decrease the
overall demand for our services. For example, a decrease in state tax revenue as well as other economic
declines may result in lower state and local government spending. In addition, our clients may find it more
difficult to raise capital in the future due to substantial limitations on the availability of credit and other
uncertainties in the municipal and general credit markets. Also, global demand for commodities has increased
raw material costs, which increases the overall project cost and more rapidly depletes the funds already
allocated to be spent on projects.
In addition, our clients may demand better pricing terms and their ability to timely pay our invoices may
be affected by an increasingly weakened economy. Our business traditionally lags any recovery in the
economy; therefore, our business may not recover immediately upon any economic improvement. If the
economy weakens further or government spending is reduced, then our revenues, net income and overall
financial condition may deteriorate.

Our results of operations depend on new contract awards, and the selection process and timing for
performing these contracts are not within our control.
A substantial portion of our revenues is directly or indirectly derived from new contract awards of
domestic and international projects. It is difficult to predict whether and when we will receive such awards
due to the lengthy and complex bidding and selection process, which is affected by a number of factors, such
as market conditions, financing arrangements, governmental approvals and environmental matters. Because a
significant portion of our revenues is generated from large projects, our results of operations and cash flows
can fluctuate from quarter to quarter depending on the timing of our contract awards. In addition, many of
these contracts are subject to client financing contingencies and environmental permits, and, as a result, we
are subject to the risk that the customer will not be able to timely secure the necessary financing and
approvals for the project, which could result in a significant delay or the cancellation of the proposed project.
Finally, current market conditions and restrictions on capital available for construction may mean that there
are materially fewer contracting opportunities available to us.

The nature of our contracts, particularly our fixed-price contracts, could adversely affect us.
Approximately 60% of our backlog as of August 31, 2008 was from cost-reimbursable contracts and the
remaining 40% was from contracts that are primarily fixed-price. Revenues and gross profit from both
cost-reimbursable and fixed price contracts can be significantly affected by contract incentives/penalties that
may not be known or finalized until the later stages of the contract term. Under fixed-price contracts, we
agree to the contract price of the project at the time we enter into the contract. While we benefit from costs
savings and earnings from approved change orders under fixed-priced contracts, we are generally unable to
recover cost overruns to the approved contract price. Under certain fixed-price contracts, we share with the
customer any savings up to a negotiated or target ceiling. When costs exceed the negotiated ceiling price, we
may be required to reduce our fee or to absorb some or all of the cost overruns.

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We also assume the risks related to revenue, cost and gross profit realized on fixed-priced contracts that
can vary, sometimes substantially, from the original projections due to changes in a variety of other factors
that include, but not limited to:
• engineering design changes;
• unanticipated technical problems with the equipment being supplied or developed by us, which may
require that we spend our own money to remedy the problem;
• changes in the costs of equipment, commodities, materials or labor;
• difficulties in obtaining required permits or approvals;
• changes in laws and regulations;
• changes in labor conditions, including the availability and productivity of labor;
• project modifications creating unanticipated costs;
• delays caused by local weather conditions;
• failure to perform by our project owners, suppliers or subcontractors; and
• general economic conditions.
These risks may be exacerbated by the length of time between signing a contract and completing the
project because most fixed-price contracts are long-term. The term of our contracts can be as long as
approximately seven years. Long-term, fixed-price contracts often make us subject to penalties if portions of
the project are not completed in accordance with agreed-upon time limits. Therefore, significant losses can
result from performing large, long-term projects on a fixed-price basis. These losses may be material,
including, in some cases, up to or exceeding the full contract value in certain events of non-performance, and
could negatively impact our business, financial condition, results of operations and cash flows.
We enter into contractual agreements with customers for some of our EPC services to be performed
based on agreed-upon reimbursable costs and labor rates. Some of these contracts provide for the customer’s
review of our accounting and cost control systems to verify the completeness and accuracy of the
reimbursable costs invoiced. These reviews could result in reductions in reimbursable costs and labor rates
previously billed to the customer.
Many of our customer contracts require us to satisfy specified design or EPC milestones in order to
receive payment for the work completed or equipment or supplies procured prior to achievement of the
applicable milestone. As a result, under these types of arrangements, we may incur significant costs or
perform significant amounts of services prior to receipt of payment. If the customer determines not to proceed
with the completion of the project or if the customer defaults on its payment obligations, we may face
difficulties in collecting payment of amounts due to us for the costs previously incurred or for the amounts
previously expended to purchase equipment or supplies. In addition, many of our customers for large EPC
projects are project-specific entities that do not have significant assets other than their interests in the EPC
project. It may be difficult for us to collect amounts owed to us by these customers. If we are unable to collect
amounts owed to us for these matters, we may be required to record a charge against earnings related to the
project, which could result in a material loss.

The ability of our customers to receive or be delayed in receiving the applicable regulatory and
environmental approvals relating to projects.
The regulatory permitting process for many of the projects performed by our Fossil & Nuclear segment
requires significant investments of time and money by our customers. There are no assurances that our
customers will obtain the necessary permits for these projects. Applications for permits, including air
emissions permits, to operate these fossil and nuclear-fueled facilities may be opposed by individuals or
environmental groups, resulting in delays and possible non-issuance of the permits.

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Our projects may encounter difficulties that may result in additional costs to us, including but not limited
to, reductions in revenues, claims, disputes and the payment of damages.
Our projects generally involve complex design and engineering, significant procurement of equipment
and supplies and extensive construction management. We may encounter difficulties in the design or
engineering, equipment and supply delivery, schedule changes and other factors, some of which are beyond
our control, that impact our ability to complete the project in accordance with the original delivery schedule.
In addition, we generally rely on third-party partners, equipment manufacturers and subcontractors to assist us
with the completion of our contracts. In some cases, the equipment we purchase for a project or that is
provided to us by the customer does not perform as expected, and these performance failures may result in
delays in completion of the project or additional costs to us or the customer and, in some cases, may require
us to obtain alternate equipment at additional cost. Any delay by partners, manufacturers and/or
subcontractors to complete their portion of the project, or any failure by our partners, manufacturers and/or
subcontractors to satisfactorily complete their portion of the project, as well as other factors beyond our
control, may result in delays in the overall progress of the project or cause us to incur additional costs, or
both. These delays and additional costs may be substantial, and we may be required to compensate the
customer for these delays. While we may recover these additional costs from the responsible third-party
partner, manufacturer or subcontractor, we may not be able to recover all of these costs in all circumstances.
In addition, some contracts may require our customers to provide us with design or engineering
information or with equipment or materials to be used in the project. In some cases, the customer may provide
us with deficient design or engineering information or equipment, or the customer may provide the
information or equipment to us later than required by the project schedule. The customer may also determine,
after commencement of the project, to change elements of the project. We are subject to the risk that we
might be unable to obtain, through negotiation, arbitration, litigation or otherwise, adequate amounts to
compensate us for the additional work or expenses incurred due to customer requested change orders or
failure by the customer to timely provide required items. A failure to obtain adequate compensation for these
matters could require us to record an adjustment to amounts of revenues and gross profit that were recognized
in prior periods. Any such adjustments, if substantial, could have a material adverse effect on our results of
operations and financial condition.

Our use of the percentage-of-completion accounting method could result in a reduction or elimination of
previously reported profits.
As more fully discussed in Part II, Item 7 — Management’s Discussion and Analysis of Financial
Condition and Results of Operations and in Note 1 — Description of Business and Summary of Significant
Accounting Policies included in Part II, Item 8 — Financial Statements and Supplementary Data, a substantial
portion of our revenues are recognized using the percentage-of-completion method of accounting, which is a
standard method for long-term construction-type contracts. The percentage-of-completion accounting
practices that we use result in recognizing contract revenues and earnings ratably over the contract term in
proportion to our incurrence of contract costs. The earnings or losses recognized on individual contracts are
based on estimates of contract revenues, costs and profitability. Although a significant portion of our
contracts are cost-reimbursable and our financial loss exposure on cost-reimbursable contracts is generally
limited, the loss provisions or adjustments to the contract profit and loss resulting from future changes in our
estimates or contract penalty provisions could be significant and could result in a reduction or elimination of
previously recognized earnings or result in losses. In certain circumstances, these adjustments could be
material to our operating results.

The nature of our projects exposes us to potential professional liability, product liability, warranty and
other claims, which may reduce our profits.
We engineer, construct and perform services in large industrial facilities where accidents or system
failures can be disastrous. Any catastrophic occurrence at locations engineered or constructed by us or where
our products are installed or services performed could result in significant professional liability, product
liability, warranty and other claims against us.

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